The opinion
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0486-22
PRINCETON NEUROLOGICAL
SURGERY, P.C.,
Plaintiff-Appellant,
v.
HORIZON BLUE CROSS BLUE
SHIELD OF NEW JERSEY,
Defendant-Respondent.
_____________________________
Submitted January 8, 2024 – Decided January 17, 2024
Before Judges Mawla and Marczyk.
On appeal from the Superior Court of New Jersey, Law
Division, Mercer County, Docket No. L-0796-19.
Buttaci Leardi & Werner, LLC, attorneys for appellant
(John W. Leardi and Nicole Patricia Allocca, on the
briefs).
Stradley Ronon Stevens & Young, LLP, attorneys for
respondent (Adam J. Petitt, of counsel; Robert J.
Norcia, on the brief).
PER CURIAM
Plaintiff Princeton Neurological Surgery, P.C. (PNS) appeals from: an
August 16, 2019 order dismissing its claims against defendant Horizon Blue
Cross Blue Shield (Horizon) for lack of subject matter jurisdiction and failure
to state a claim; a November 15, 2019 order denying PNS's motion to amend its
complaint; and six September 2, 2022 orders granting Horizon's motion for
summary judgment and other relief dismissing PNS's common law claims. We
affirm.
PNS is a neurological surgery practice that is an out-of-network provider
with Horizon and has no contractual fee agreement when it treats Horizon's
beneficiaries in exchange for participating in Horizon's managed care network.
Between 2014 and 2017, PNS made insurance verification calls to Horizon
before treating Horizon-insured patients: D.A., K.C., J.C., D.C., M.G., D.K.,
T.M., P.M., B.M., and D.R. 1
According to PNS's complaint, during each call, PNS disclosed the
procedure it intended to perform and each patient's insurance information to
Horizon. PNS "verified the amount of benefits payable for each service by
requesting . . . the reimbursement methodology for out-of-network services, the
applicable patient cost sharing under each plan, including deductibles, co -
1
We use initials pursuant to Rule 1:38-3(a)(2).
A-0486-22
2
payments, and/or co-insurance, and also the annual out-of-pocket maximum . . .
under each patient's [p]lan." Horizon verified PNS was eligible for payment
"based on a specific percentile of the [FAIR] Health[2] guidelines" as an out-of-
network provider.
PNS's complaint noted it understood the "verification of [p]lan benefits"
was "not . . . a guaranty of payment." Indeed, during every verification call
placed to Horizon, there was a recorded disclaimer the representations made
during the call were not a guaranty of payment. A PNS employee confirmed
this fact during her deposition. Furthermore, PNS's complaint acknowledged it
knew "there are items outside of eligibility that affect reimbursement [such as]
medical necessity." PNS performed the surgeries on the Horizon-insured
patients after the verification calls.
FAIR Health is used to calculate benchmark healthcare charges based on
an aggregate dataset of actual charges for medical treatment and procedures,
organized by geographic location, and arranged from lowest to highest costs,
2
"FAIR Health is an independent nonprofit that collects data for and manages
the nation's largest database of privately billed health insurance claims and is
entrusted with Medicare Parts A, B and D claims data for 2013 to the present."
FAIR Health, https://www.fairhealth.org/about-us (last visited Jan. 9, 2024).
A-0486-22
3
broken into percentiles. 3 It provides a fee estimator, which allows providers to
view the benchmark charge data "in distinct geographic areas, called geozips,
which are generally identified by the first three digits of a zip code." 4 Another
methodology for calculating benchmark charges is the Prevailing Healthcare
Charges System (PHCS) database.
After performing the surgeries, PNS billed Horizon. The bills for each
patient and Horizon's payments were detailed in PNS's complaint as follows:
A. [PNS] submitted a bill to Horizon on behalf of D.A.
detailing CPT [5] codes valued at $157,512.00. The
[ninety percent] Fair Health value for those services for
geozip 085 is $102,494.22. Horizon only paid
$45,251.00, therefore leaving a balance of $57,561.22.
B. [PNS] submitted a bill on behalf of K.C. detailing
CPT codes valued at $351,384.00. The [ninety percent]
Fair Health value for those services for geozip 085 is
$219,317.93. Horizon only paid $116,935.75, therefore
leaving a balance of $67,099.50.
3
FAIR Health, Benchmarks That Mirror the Market,
https://www.fairhealth.org/methodologies (last visited Jan. 9, 2024).
4
FAIR Health, Frequently Asked Questions, https://www.feeestimator.org/faq
(last visited Jan. 9, 2024).
5
The American Medical Association (AMA) promulgates CPT codes for every
procedure reimbursable by medical insurance providers. See CPT Codes, Then
and Now, American Medical Association (Aug. 4, 2015), https://www.ama-
assn.org/practice-management/cpt/cpt-codes-then-and-now.
A-0486-22
4
C. [PNS] submitted a bill on behalf of J.C. detailing
CPT codes valued at $115,161.00. The [ninety percent]
Fair Health value for those services for geozip 085 is
$79,238.19. Horizon only paid $4,948.87, therefore
leaving a balance of $16,736.10.
D. [PNS] submitted a bill on behalf of D.C. detailing
CPT codes valued at $151,749.00. The [ninety percent]
Fair Health value for those services for geozip 085 is
$104,931.11. Payment should be [twenty percent] of
the billed charges according to the [ninety percent] Fair
Health value, which totals $30,349.80. Horizon only
paid $7,871.95, therefore leaving a balance of
$22,477.85.
E. [PNS] submitted a bill on behalf of M.G. detailing
$220,978.00 worth of services. The [ninety percent]
Fair Health value for those services for geozip 085 is
$145,106.97. Horizon only paid $68,208.00, therefore
leaving a balance of $96,537.00.
F. [PNS] submitted a bill on behalf of D.K. detailing
CPT codes valued at $221,805.00. The [seventy
percent] Fair Health value for those services for geozip
085 totaled $100,669.00. Horizon only paid
$74,931.20, therefore leaving a balance of $25,737.80.
G. [PNS] submitted a bill on behalf of T.M. detailing
CPT codes valued at $82,093.00. The [ninety percent]
Fair Health value for those services for geozip 085 is
$48,587.70. Horizon only paid $23,198.00, therefore
leaving a balance of $25,389.70.
H. [PNS] submitted a bill on behalf of P.M. detailing
CPT codes valued at $151,749.00. The [ninety percent]
Fair Health value for those services for geozip 085 is
$112,176.28. Horizon only paid $62,083.00, therefore
leaving a balance of $50,093.28.
A-0486-22
5
I. [PNS] submitted a bill on behalf of B.M. detailing
CPT codes valued at $257,145.00. The [ninety percent]
Fair Health value for those services for geozip 085
totaled $119,290.59. Horizon only paid $6,714.94,
therefore leaving a balance of $13,157.54.
J. [PNS] submitted a bill on behalf of D.R. detailing
CPT codes valued at $168,001.00. The [ninety percent]
Fair Health value for those services for geozip 085 with
the appropriate [twenty percent] balance is $76,790.40.
Horizon only paid $37,413.75, therefore leaving a
balance of $39,376.65.
In total, PNS claimed Horizon underpaid $414,166.14, despite that during the
verification calls Horizon represented it would pay: ninety percent of Fair
Health value for D.A., K.C., J.C., D.C., M.G., T.M., P.M., B.M., and D.R.; and
seventy percent of Fair Health value for D.K.
Eight of the patients were covered under the State Health Benefits Plan
(SHBP), which is governed by the State Health Benefits Commission. The
SHBP Member Handbook qualifies what it will pay by repeatedly stating it
"covers only reasonable and customary allowances . . . determined by the FAIR
Health benchmark charge data or a similar nationally recognized database." The
SHBP patients were K.C., J.C., D.C., M.G., T.M., P.M., B.M., and D.R. D.K.
and D.A. were covered under Horizon plans governed by the Employee
Retirement Income Security Act (ERISA).
A-0486-22
6
At summary judgment, Horizon cited the SHBP and noted that aside from
using the FAIR Health or PHCS databases to calculate the payment to an out-
of-network provider, reimbursement was subject to "terms, conditions, and
limitations of the health benefits plan and Horizon's administration of the same."
Horizon noted the ERISA-governed health benefits plans gave Horizon
"considerable discretion" to decide what was covered and what to pay PNS for
treating D.K. or D.A. Horizon's discretion included the ability to decide whether
a service was "'incidental' to another service or contrary to the 'framework of
generally accepted methods of medical management currently used in the United
States.'"
FAIR Health releases updated data every May and November. Horizon
updates its system with the May data in July and the November data in January.
On November 18, 2016, the Horizon customer service representative told
PNS that D.K.'s out-of-network benefits would be reimbursed at the FAIR
Health seventieth percentile. PNS never asked, and Horizon never specified,
whether it would use the May 2016 or November 2016 FAIR Health data to
calculate reimbursement. Furthermore, as noted in the parties' joint statement
of undisputed facts, PNS had not seen D.K. for an initial consultation when it
made the insurance verification call with Horizon. On January 4, 2017, D.K.
A-0486-22
7
had her surgery and PNS submitted its claim to Horizon two days later. Horizon
paid PNS at the seventieth percentile of the FAIR Health database, using the
May 2016 FAIR Health data because the November 2016 data was not made
effective in Horizon's system until January 29, 2017. 6 PNS disputed Horizon's
use of the November 2016 FAIR Health data. However, a PNS employee
testified at deposition that Horizon never told PNS it was going to use the most
recent FAIR Health data, and PNS never told Horizon it expected reimbursement
would be based on the latest FAIR Health data.
On February 13, 2015, PNS made the insurance verification call to
Horizon regarding D.A. Like D.K., PNS does not dispute it did not know what
services it would provide or how much it would charge Horizon, because D.A.'s
initial consultation had not yet occurred. Horizon told PNS D.A.'s out-of-
network benefits would be reimbursed at the ninetieth percentile of the FAIR
Health data. Following the call, PNS saw D.A. and then sought prior
authorization from Horizon for the services PNS deemed necessary, which
Horizon granted on February 27, 2015.
6
Horizon further reduced the sum it paid because one procedure submitted by
PNS was considered incidental to another procedure. PNS does not dispute the
secondary deduction.
A-0486-22
8
D.A.'s plan defined an allowed charge as the "standard approved by
[Horizon's] Board." As a result, Horizon reimbursed PNS at the eightieth
percentile of the PHCS profile. The parties do not dispute this did not match
what the Horizon representative told PNS during the insurance verification call.
Also, PNS submitted a claim form noting D.A.'s procedure took place in
Plainsboro, but the billing address was noted as Hamilton. FAIR Health uses
the geozip for the location of the procedure. However, Horizon applied the
geozip for the billing address. PNS claimed it expected Horizon to reimburse
according to the procedure geozip.
In 2019, PNS sued Horizon alleging five common law causes of action,
including, as relevant here, promissory estoppel and negligent
misrepresentation. Horizon moved to dismiss the complaint as pertained to the
eight SHBP patients on grounds the Law Division lacked subject matter
jurisdiction because the Commission had final authority over payment of
benefits and resolutions of disputes. The court entered the August 16, 2019
order, directing PNS to present its claims to the Commission and granting
Horizon's motion.
PNS moved for leave to file an amended complaint, alleging it had no
standing to bring claims before the Commission because it was not a legal
A-0486-22
9
representative of the SHBP patients. The court entered the November 15, 2019
order denying PNS's motion, and held the SHBP patients were indispensable
parties to PNS's common law claims and therefore a motion to amend would be
futile. PNS's subsequent motion for reconsideration was denied.
In 2021, PNS moved for summary judgment on the remaining claims
relating to D.A. and D.K. Horizon cross-moved for summary judgment, arguing
PNS's claims were preempted by ERISA. The court entered the September 2,
2022 orders, denying PNS's motion and granting Horizon's cross-motion
dismissing each count of the complaint. The court issued a separate opinion,
finding PNS's claims were "expressly preempted by Section 514 [of ERISA]
because they impermissibly 'relate to' and make 'reference to' D.K.'s and D.A.'s
ERISA-governed health benefits plans."
I.
On appeal, PNS argues the August 16, 2019 order finding the court lacked
subject matter jurisdiction was based on an erroneous interpretation of Beaver
v. Magellan Health Services, Inc., 433 N.J. Super. 430 (App. Div. 2013).
Likewise, the November 15, 2019 order denying PNS's motion to amend the
complaint because it lacked standing before the Commission was erroneous.
A-0486-22
10
PNS asserts the court's reliance on Beaver was misplaced because there
the plaintiff had standing as a beneficiary to raise claims before the Commission,
but then sued in the Law Division as a collateral challenge to a final agency
decision "cloak[ed] . . . under the mantle of contract and tort." Id. at 441. The
plaintiff in Beaver had already unsuccessfully appealed the agency decision and
conceded the new case was brought to recover "unpaid benefits." Ibid. PNS
argues, therefore, that Beaver is distinguishable.
PNS asserts the court clearly had jurisdiction because a provider cannot
appeal a claim to the Commission. It notes the assignment of benefits signed by
patients does not cure the standing issue either. Further, its reimbursement
claims did not require a determination by the Commission because the dispute
with Horizon regarded the reimbursement methodology, which the court was
capable of adjudicating.
"Whether subject matter jurisdiction exists presents a purely legal
issue . . . ." Santiago v. N.Y. & N.J. Port Auth., 429 N.J. Super. 150, 156 (App.
Div. 2012) (internal citations omitted). Therefore, our review is de n ovo. Ibid.
There is no dispute PNS lacked standing before the Commission because
it was not a member of the health plans administered by the Commission.
N.J.A.C. 17:9-1.3 allows any "member" to pursue complaints internally with the
A-0486-22
11
plan, and if the matter is unresolved, the member "may request that the matter
be considered by the Commission." A member is defined as any covered
individual, whether a "subscriber or a dependent." N.J.A.C. 17:9-1.8. The
Horizon Member Guidebook reiterates "[o]nly the member or the member's legal
representative may appeal, in writing, to the [Commission]."
The Commission was created by the New Jersey Health Benefits Program
Act, which "establishes a plan for state funding and private administration of a
health benefits program . . . ." Heaton v. State Health Benefits Comm'n, 264
N.J. Super. 141, 151 (App. Div. 1993); see N.J.S.A. 52:14-17.24 to -45. "The
[SHBP] is, in effect, the State of New Jersey acting as a self-insurer." Burley v.
Prudential Ins. Co. of Am., 251 N.J. Super. 493, 495 (App. Div. 1991).
"[T]he [Commission] alone has the authority and responsibility to make
payments on claims and to limit or exclude benefits." Beaver, 433 N.J. Super.
at 433 (citing N.J.S.A. 52:14-17.29(B)). The Act empowers the Commission to
create "rules and regulations as may be deemed reasonable and necessary for
[its] administration . . . ." N.J.S.A. 52:14-17.27(a). Pursuant to this authority
the Commission adopted N.J.A.C. 17:9-1.3, which permits only members, not
providers, to pursue appeals with the Commission.
A-0486-22
12
Therefore, the trial court's jurisdictional ruling was correct. The central
issue was the reimbursement methodology used to pay PNS. This necessitated
an interpretation of the SHBP, which can only be performed by the Commission.
The Commission alone has the authority to adjudicate disputes related to the
SHBP, N.J.S.A. 52:14-17.27, and through N.J.A.C. 17:9-1.3, created a
regulatory scheme whereby only members have standing to pursue
reimbursement claims. As a result, the court also properly denied PNS's motion
to amend the complaint because it would not resolve PNS's lack of standing.
II.
PNS argues its claims regarding D.K.'s and D.A.'s ERISA-governed plans
were not preempted because the Third Circuit has held state common law claims
are not claims for benefits due under an ERISA plan in Plastic Surgery Center,
P.A. v. Aetna Life Insurance, 967 F.3d 218, 229 (3d Cir. 2020)). PNS likens its
case to Plastic Surgery and argues its promissory estoppel claim arose when
Horizon made representations to PNS regarding payment, which the court could
adjudicate without interpreting the ERISA plans.
In Plastic Surgery, the Third Circuit ruled that a promissory estoppel claim
by an out-of-network provider for payment under an Aetna health plan was not
preempted by ERISA. Id. at 230. The court held the preemption of a common
A-0486-22
13
law claim by ERISA depends on whether it seeks to "enforce obligations
independent of the plans" or if a determination of liability requires cons truction
of the terms of the plans. Ibid.
PNS asserts the trial court applied too stringent of a standard because, in
effect, its ruling was that any reference to ERISA triggers preemption. PNS
argues its claims were not tethered to the plan, because the dispute regarded its
request for payment under "an appropriate percentile of FAIR Health" and its
reliance on Horizon's representations of what it would pay for D.K.'s and D.A.'s
treatment. In other words, like Plastic Surgery, preemption played no role
because: the dispute was not one that ERISA intended to govern; its claims did
not interfere with the administration of the ERISA plan; and preemption would
undermine ERISA's purpose by permitting insurers to induce out -of-network
providers to provide services with knowledge ERISA's preemption would bar
payment to the providers.
"A trial court's interpretation of the law and the legal consequences that
flow from established facts are not entitled to any special deference."
Manalapan Realty, L.P. v. Twp. of Manalapan, 140 N.J. 366, 378 (1995).
"Whether a state law claim is preempted by ERISA is a question of law which
is reviewed de novo." Feit v. Horizon Blue Cross & Blue Shield of N.J., 385
A-0486-22
14
N.J. Super. 470, 482 (App. Div. 2006) (quoting Finderne Mgmt. Co. v. Barrett,
355 N.J. Super. 170, 185 (App. Div. 2002)).
We are unpersuaded by PNS's arguments. Section 514(a) of ERISA
preempts state law claims that "relate to" an ERISA plan. 29 U.S.C. § 1144(a).
As the trial court noted, the scope of State laws preempted by this provision is
expansive, encompassing "all laws, decisions, rules, regulations, or other State
action having the effect of law, of any state[.]" Menkes v. Prudential Ins. Co.
of Am., 762 F.3d 285, 294 (3d Cir. 2014). A State law "relates to" an ERISA
plan if it has either a "reference to" or a "connection with" that plan. Shaw v.
Delta Air Lines, Inc., 463 U.S. 85, 97 (1983).
Plastic Surgery is inapposite. There, the out-of-network provider was not
entitled to reimbursement and entered a separate agreement with the insurer, to
cover a specific procedure for the patient "along with related medical services"
and pay "a reasonable amount for those services according to the terms of the
[ERISA p]lan." 967 F.3d at 224, 232. The insurer "agreed to approve and pay
for" the surgery at the "highest in[-]network level." Id. at 224 (alteration in
original). The Third Circuit held:
Whether the [provider] seeks to enforce
obligations independent of the plan turns on whether
the parties agreed (i) that [the insurer] would provide
payment for all services necessary to perform the
A-0486-22
15
respective surgeries, leaving only the amount of
payment pegged to the terms of the plan; or (ii) that the
scope of coverage, as well as payment, would be
limited to the terms of the plans—leaving open the
possibility that some services would not be
compensated at all.
[Id. at 231 (internal citation omitted).]
Here, the record reveals no express or implied agreement, let alone a
promise that cross-referenced D.A. and D.K.'s ERISA plans as the parties had
in Plastic Surgery. Moreover, reimbursement remained contingent upon the
services D.A. and D.K.'s plans deemed necessary or incidental. In D.K.'s case,
there was no representation Horizon would apply the November 2016 FAIR
Health values, and Horizon was not mandated by law to apply the updated FAIR
Health figures. In D.A.'s case, Horizon was not required to reimburse using the
address where PNS rendered services. Although Horizon's application of the
PHCS methodology for reimbursement in D.A.'s case contradicted what its
representative told PNS during the insurance verification call, the call was
preceded by a disclaimer and the prior authorization did not pertain to the
payment or result in a payment agreement.
III.
PNS challenges the summary judgment ruling dismissing its promissory
estoppel and negligent misrepresentation claims. It contends Horizon made a
A-0486-22
16
promise, which induced PNS to render services to the patients. Further, the
court erred by finding there was no reliance because the disclaimer abjured a
guaranty of payment, which had nothing to do with Horizon's duty to provide
accurate information to out-of-network providers like PNS.
Summary judgment is appropriate "if the pleadings, depositions, answers
to interrogatories and admissions on file, together with the affidavits, if any,
show that there is no genuine issue as to any material fact challenged and that
the moving party is entitled to a judgment or order as a matter of law." R. 4:46-
2(c). The court considers "whether the competent evidential materials
presented, when viewed in the light most favorable to the non-moving party, are
sufficient to permit a rational factfinder to resolve the alleged disputed issue in
favor of the non-moving party." Brill v. Guardian Life Ins. Co., 142 N.J. 520,
540 (1995). "[W]hen the evidence 'is so one-sided that one party must prevail
as a matter of law,' . . . the trial court should not hesitate to grant summary
judgment." Ibid. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252
(1986)). "[W]e review [a] trial court's grant of summary judgment de novo
under the same standard as the trial court." Templo Fuente De Vida Corp. v.
Nat'l Union Fire Ins. Co., 224 N.J. 189, 199 (2016).
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17
Promissory estoppel requires: "(1) a clear and definite promise; (2) made
with the expectation that the promisee will rely on it; (3) reasonable reliance;
and (4) definite and substantial detriment." Goldfarb v. Solimine, 245 N.J. 326,
339-40 (2021) (quoting Toll v. Bd. of Chosen Freeholders, 194 N.J. 223, 253
(2008)). A party asserting a negligent misrepresentation claim must show the
defendant had a duty of care. Zielinski v. Pro. Appraisal Assocs., 326 N.J.
Super. 219, 224 (App. Div. 1999). Whether a duty exists is a matter of law
determined by the court after "balancing several factors" including "the
relationship of the parties, the nature of the attendant risk, the opportunity and
ability to exercise care, and the public interest in the proposed solution." Carter
Lincoln-Mercury, Inc., Leasing Div. v. EMAR Grp., Inc., 135 N.J. 182, 194
(1994) (quoting Hopkins v. Fox & Lazo Realtors, 132 N.J. 426, 439 (1993)).
The trial court correctly concluded PNS's promissory estoppel claim failed
because as we noted in section II, Horizon did not promise PNS anything. The
lack of a promise was confirmed by Horizon's disclaimer. Moreover, PNS could
not have reasonably relied on Horizon's representations as it had not seen the
patients, let alone rendered services to them at the time of the authorization call
with Horizon.
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The negligent misrepresentation claim could not survive summary
judgment because Horizon's duty was to its insured beneficiaries, not PNS.
Horizon had no contract with PNS. We recognize Plastic Surgery found the
opposite, but there the insurer and the out-of-network provider had a contract.
Therefore, the court found leaving out-of-network providers with no means of
enforcing their contract
would in effect allow insurers to illegitimately
supplement their provider network by making promises
of payment to induce the provision of services, safe in
the knowledge that those out of network would have no
recourse for breach of those promises. The
consequence . . . would be for providers to begin to
require up-front payments from patients or to "deny
care or raise fees to protect themselves against the risk
of noncoverage."
[Plastic Surgery, 967 F.3d at 239 (quoting Lordmann
Enters. v. Equicor, Inc., 32 F.3d 1529, 1533 (11th Cir.
1994).]
Setting aside that PNS and Horizon did not have a contract, we are not
convinced the concerns raised in Plastic Surgery exist here. We are not
persuaded it would serve the public interest to bind Horizon based upon an
authorization call that was subject to a disclaimer. To find a duty under these
circumstances would harm insureds, because Horizon would be hesitant to field
calls from out-of-network providers, who in turn would decline to provide
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19
services to the insureds because they could not obtain authorization from the
insurer.
Finally, Horizon did not misrepresent a fact that PNS justifiably relied
upon. Even in the case of mistaken representation regarding the reimbursement
methodology in D.A.'s case, there was no reasonable reliance because PNS did
not know D.A.'s diagnosis or the CPT codes it intended to bill. Therefore, the
payment PNS would receive was not yet known.
For these reasons, summary judgment in Horizon's favor was properly
granted. To the extent we have not addressed an argument raised on appeal, it
is because it lacks sufficient merit to warrant discussion in a written opinion. R.
2:11-3(e)(1)(E).
Affirmed.
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